COB 241-242 Financial and Managerial Accounting learning objectives

The primary goal of our six hour introductory accounting sequence is to help students learn how accounting meets the information needs of various users through the preparation, communication, and use of financial information, including financial statements to support operating, investing, and financing decisions. This goal is achieved by pursuing the following outcomes and core competencies.

1. Describe how businesses operate.  This includes
• explaining the meanings of key business terms,
• identifying the characteristics of the corporate, partnership, and sole proprietorship forms of entity and discussing the advantages and   disadvantages of each,
• classifying business transactions into operating, investing, and financing activities, and
• describing the key differences in the financial statements of merchandisers, manufacturers, and service companies.


2. Analyze historical and prospective transaction data and employ the analysis to prepare balance sheets, income statements, statements of cash flow and statements of owner's quity.  This includes
   • discussing what information is typically found in the primary financial statements,
   • describing the elements of and the concepts underlying the primary financial statements,
   • applying the fundamental accounting equation (Assets = Liabilities + Owners' Equity) to analyze the effects of accounting transactions on the primary financial statements,
   • discussing and applying the criteria used to determine when revenue is recognized,
   • discussing and applying the criteria and process used to recognize expenses,
   • preparing a balance sheet that reports the financial condition of an entity,
   • preparing an income statement that reports the results of operations of an entity for a period,
   • preparing a statement of cash flows which summarizes the cash flow effects of an entity's operating, investing and financing activities  for a period,
   • preparing a statement of owners' equity which explains the changes in the components of owners' equity for a period, and
   • distinguishing between the accrual and cash basis of income measurement, and explaining the link (articulation) among the primary  financial statements.
   
   
3. Identify and describe how accounting meets the information needs of managers, investors, and creditors. This includes
• identifying the types of decisions these users make,
• describing what information in the financial statements and related disclosures meets the needs of each group,
• reading and  interpreting financial statements, and
• identifying limitations of financial statements.


4. Explain and demonstrate how accounting information is used to make management decisions needed to operate a business entity. This includes
• distinguishing among and calculating fixed, variable, and mixed costs,
• explaining the usefulness and discussing the limitations of Cost-Volume-Profit analysis as a decision tool,
• calculating contribution margin, contribution margin ratio,break-even point in sales dollars and units, and target sales volume in dollars and units,
• calculating and analyzing the effects of changes in sales volume, sales price, variable cost and/or fixed costs on contribution margin,  break-even point, and operating income, and
• identifying the relevant costs in business decisions and discussing both the qualitative and quantitative factors considered in the  decision.


5. Explain and demonstrate how accounting information can be used to analyze and improve efficiency in operating, financing, and administering a business entity. This includes
• explaining the purposes of budgets and preparing a straightforward operating and cash budget,
• discussing the limitations of budgets in managing oganizations,
• explaining how the concept of responsibility accounting applies to cost centers, profit enters and investment centers,
• distinguishing between controllable and non-controllable  costs and discussing why he distinction is important, and
• explaining how the concept of cost control is used to compare budgeted to actual mounts and to interpret significant variance.